Multifamily is the way to go change my mind

Rental Property Investor · Sioux Falls, SD · Member since 2019 · 129 posts · 138 votes

I think that multifamily (2-4 units) is one of the best types of properties to invest in especially when first getting started change my mind.

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Tyler Kastelberg

Real Estate Technology · San Francisco, CA · Member since 2016 · 262 posts · 265 votes

@Isaac Johnson @Abel Curiel

Like most of "louder with crowder" -- this is a very controversial topic.

I'm on team Grant Cardone ... investing in single family or small multifamily should be short-term, value-add flips that create wealth for investment in larger multifamily properties.

Two big problems with small multifamily:

1) Lack of good property management options

2) The inability to efficiently scale

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Alyssa Dyer
Rental Property Investor · Oklahoma City, OK · Member since 2017 · 1k+ posts · 694 votes
7y
The best deals are the deals where the numbers work. If you love a market where you can get cash flowing SFR's all day but the multi numbers dont make sense.. it would make more sense to pull the trigger on cash flow and not wait 3 years to snag one multi.
2 Reply
Chris Salerno
Rental Property Investor · Charlotte NC · Member since 2019 · 306 posts · 183 votes
7y
I agree!
I came from single-family real estate sales an rentals.
Mutli family, in my opinion, is a safer asset class. I focus heavily on the Charlotte NC market.
0 Reply
Randall Weatherall
Real Estate Agent · Memphis, TN · Member since 2019 · 261 posts · 253 votes
7y
Who would want to change your mind?! Fourplexes especially can be a great start in a lot of markets as they can pop up in just about any neighborhood due to house hacks that were converted. Duplexes can be a bit more dubious in our market and triplexes are just downright rare, but fourplexes are more common and more accessible (and more doors on the same loan) so I would have to agree 100%.
0 Reply
Yasir Einaudi
Realtor · El Paso, TX · Member since 2017 · 86 posts · 50 votes
7y
I will have to agree with the majority of people here, 2-4 MF's are no longer attractive but a good place to start if you can find a deal, I can find 2-4 MFH deals here in El Paso, Texas about once every 2 weeks (talking about 1% rule) here in my market but it's getting harder each time. I analyze and send these to my buyer's list and they snap them in no time especially the out-of-state investors from CA, with CAP rates of 7-9% they are pleased.
1 Reply
Danny RandazzoPro Member
Apartment Syndicator · Charleston, SC · Member since 2016 · 973 posts · 728 votes
7y
@Isaac Johnson keep after it and you’ll get it find the funds! Good luck
1 Reply
Corbin Jones
Rental Property Investor · Joplin, MO · Member since 2017 · 66 posts · 9 votes
7y
@Jennifer Rysdam I've looked into this and it seems like the requirements of FHA-financed fourplexes are difficult to accomplish in some areas, and competition is so great that it's hard to find a fourplex before other people find it. Would you recommend buying a fourplex that needs work??
0 Reply
Corbin Jones
Rental Property Investor · Joplin, MO · Member since 2017 · 66 posts · 9 votes
7y
@John Nachtigall sorry for my ignorance, but what is syndication?
0 Reply
Louie Masters
Rental Property Investor · Fremont, NE · Member since 2016 · 23 posts · 5 votes
7y
@Isaac Johnson
It depends. If it’s a home conversation and it’s a 4-plex for example, you have the potential of 4 times the capacity in that home. If you have 2 people in each unit that’s 8 people in one home. That’s a lot of wear and tear on the property. They do cash flow in more cases a lot more than a single family. My advice if you go multi unit is to go traditional multi unit.
Good luck!
0 Reply
Bryan MitchellPro Member
Rental Property Investor · Columbus, GA · Member since 2016 · 634 posts · 337 votes
7y
@Eric C., yes, trading up works too. You’ve got equity in those small MFs that can be reinvested.
0 Reply
Stevenson Legentus
Rental Property Investor · Coral Springs, FL · Member since 2015 · 8 posts · 5 votes
7y
I completely agree..I’m working on getting my first multi-family within 2 years
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Dennis M.
Rental Property Investor · Erie, PA · Member since 2018 · 6k+ posts · 9k+ votes
7y
Turnover kills cashflow . People who rent a house stay longer and the house appreciates better also it’s easier to unload for your exit . Multi is great for cashflow . I like mix of both . I think it provides safety and evens out the drama in this business . If your in the rust belt and you can get homes for under 20k like me then buy them up by the bushels and you’ll do justvas good as buying small apartment houses
2 Reply
Jennifer Rysdam
Rental Property Investor · Cleveland, MN · Member since 2017 · 518 posts · 354 votes
7y
Originally posted by @Corbin Jones:
@Jennifer Rysdam I've looked into this and it seems like the requirements of FHA-financed fourplexes are difficult to accomplish in some areas, and competition is so great that it's hard to find a fourplex before other people find it. Would you recommend buying a fourplex that needs work??

Hi Corbin. I would definitely recommend one that need some work if you have the skills to do it yourself. If you have to hire it all out then it becomes a money pit for you if you don't have the funds to do it. The best way to find a good deal is to just stay on top of the market and see what is added each day. Get pre-qualified at the bank so that when a deal finally comes along you can jump on it. I find that there are a lot more of these multi properties created out of older, larger homes, especially in college towns. You just have to figure out your market and see what will work the best for you. Good luck!

1 Reply
Sam Marquez
Rental Property Investor · Singapore · Member since 2016 · 15 posts · 7 votes
7y
Bunch of people posting about just jumping into larger MF.. my question is how? For those less experienced, the gap between SFH and 2-4 units is small enough that the course is pretty easy to plot.
How does one get into these larger multifamilies? Is it always going to be trading up or syndication? I'm looking to get in the space but don't know how. I was looking at smaller multis, similar to OP, but y'all have me reconsidering.
0 Reply
Clark Michael
Property Manager · High point, NC · Member since 2017 · 52 posts · 21 votes
7y
I fully agree. Multi family is the way to go.
1 Reply
Jeffrey Grieshop
New to Real Estate · Coldwater, OH · Member since 2018 · 105 posts · 61 votes
7y
@Sam Marquez unless you have a hefty amount ready for a downpayment i am guessing it won't be easy. It seems like syndication is common for large mf. I would certainly think the vast majority of large mf investors worked their way up or are part of a syndication. I doubt anyone under 35 is jumping straight to owning a 50 unit complex. If it happens, it has to be pretty rare. I attended a local meetup that was geared toward large mf, syndication seemed to be a common thing.
0 Reply
Jim BlackburnBusiness Member
Lender · Florida Based (48 states Puerto Rico) · Member since 2017 · 324 posts · 123 votes
7y
@Isaac Johnson
"RE: Not everyone has the money to buy large multifamily properties."

If this is your first property, buying a multi family with just 3.5% down is the way to go. Read my post on this thread.

https://www.biggerpockets.com/forums/311/topics/491821-help-with-purchasing-first-multi-family-home

https://www.biggerpockets.com/forums/311/topics/491821-help-with-purchasing-first-multi-family-home

954-993-1625
Stairway Mortgage, a Division of NEXA Mortgage LLC598 Reviews
Website View Page
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Account Closed
Financial Advisor · CA · Member since 2012 · 128 posts · 76 votes
7y
Think I prefer my 12% returns from day one on cheap condos. Easy to find. Under-loved.
Not much city interference. Easy to manage. Fees include water/sewer. Every time I do the numbers on multis and houses, I go back to condos.
1 Reply
Luka Milicevic
Real Estate Agent · Nashville, TN · Member since 2015 · 2k+ posts · 2k+ votes
7y
We might not be able to agree on Multi Fam vs Single Fam,
But, at least we can ALL agree on one thing.....
Michael Jordan > Lebron James
5 Reply
Mayer M.
Investor · Cherry Hill, NJ · Member since 2016 · 860 posts · 324 votes
7y
@John L Desimone
Send me what you have. I’m interested
0 Reply
Isaac Johnson
OP
Rental Property Investor · Sioux Falls, SD · Member since 2019 · 129 posts · 138 votes
7y
@Clark Michael you know what I’m sayin
1 Reply
Isaac Johnson
OP
Rental Property Investor · Sioux Falls, SD · Member since 2019 · 129 posts · 138 votes
7y
@Bob Prisco yeah, whatever you decide to do, you just need to take action.
1 Reply
Isaac Johnson
OP
Rental Property Investor · Sioux Falls, SD · Member since 2019 · 129 posts · 138 votes
7y
@John L Desimone Sioux Falls man!
1 Reply
Augustus Bukowski
Specialist · Seattle, WA · Member since 2015 · 22 posts · 7 votes
7y
@Isaac Johnson hands down the best strategy to get started! Especially when you add in Freddie Mac Home Possible financing with 5% down. You can really leverage up your unit count.
0 Reply
Michael Ealy
Developer · Cincinnati, OH · Member since 2018 · 1k+ posts · 3k+ votes
7y
Originally posted by @Isaac Johnson:
I think that multifamily (2-4 units) is one of the best types of properties to invest in especially when first getting started change my mind.

Isaac,
If you are:
1. a beginner and don't have much cash and experience;
2. small multifamily (2-4 units) exist in your market and is in demand (from tenants); and
3. you can buy them at a reasonable price
Then YES, it makes sense for you to start there.
That's how I started and re-started when I lost everything. That's how I went from losing everything to acquiring over 1,000 apartment units. Here's the story I shared on BP (Part 2 of a 3-Part series):

https://www.biggerpockets.com/forums/55/topics/692382-from-bankruptcy-to-1-000-units-part-2-rising-from-the-ruins

However, small multi family does not give you "real money" from a cashflow standpoint. $100/mo per unit or $400/month for 1 4-plex with all the headaches and work it entails is not worth it long term.
What you want is to buy a 4-plex that needs repairs, add value, lease it out and then sell for a BIG capital gains. Then use the capital gains to buy a bigger apartment (or with more units).
You may not believe this but the work you and time involvement you do on a 4-plex is almost the same with 10, or 20 units. Then when you scale up to 100 units, the work is actually LESS because a 100-unit apartment complex can afford a full time property manager and a semi-full time maintenance manager. 90% of the drama is gone and all you do is manage the property manager and ensure you increase its value through smart capex.
3 Reply
Jason Levy
Rental Property Investor · Boonton, NJ · Member since 2015 · 2 posts · 8 votes
7y
@Isaac Johnson I started out this way with five 2-family properties and two 3-family properties. Just dont chase yield. In my opinion stay away from C,D, and F properties. Only buy in good school systems. You will deal without all the shenanigans, crime, more evictions, possibly gangs, etc. These low end properties will also most likely appreciate slower and be a tough sale down the road. I have seen some unbelievable things, from illegal tattoo parlors in my basement, to dozens of dead fish on my roof... so I eventually trimmed these out of my portfolio.
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